Don’t Park Purpose
Guest blog by Alyson Chadwick
One of the questions I’m asked on Purpose is whether the cost of living crisis and high inflation will put pay to the growth in focus on Purpose – either slowing/halting its progress, or even reversing some actions already being taken by organisations.
Reading between the lines, the assumption being made here is that being Purpose-led means a higher cost base and potentially higher price points for customers –doing ‘good things’ for colleagues and communities such as living wage, sustainable supplier relationships, supporting specific causes in society/local communities – costs more.
It’s true that some Purpose-led actions do cost more. However, only looking at Purpose through the lense of ‘what is this costing us?’ reflects only one side of the equation. It misses the benefits, value and resilience that leading with Purpose and having it truly embedded across the organisation brings to navigating challenges and outperforming competitors. Especially in turbulent, uncertain times and tough trading conditions.
So when asked … ‘With inflation, economic uncertainty and the cost of living crisis, can we afford to be Purpose-led right now?’ … my answer is …
Can you afford not to?
And research by others backs this up…
Analysis by Blackrock in 2020 indicated that “during market downturns in 2015–16 and 2018, sustainable indices tended to outperform their non-sustainable counterparts.”
Source: HBR, ‘ESG and Corporate Purpose in a Disrupted World’, 2020
During the last financial crisis, B Corps were 63% more likely than other businesses of a similar size to make it through the downturn. “We think that’s because those companies were more resilient,” he says. “They had stronger relationships with their workers, or their customers, or through their supply chains, that allowed them to make it through”
Interview with Andrew Kassoy, Co-founder of B-Lab, Fast Company 2020
73% of business leaders say that having a well-integrated purpose will help their company navigate disruption
Source: EY How can purpose reveal a path through disruption, 2020
Purpose and navigating current challenges in your organisation
Here’s 5 things to think about in relation to Purpose in your organisation and how it can help you navigate the current economic and market outlook:-
- Some Purpose-led Actions can improve your organisation’s economics – it’s not all ongoing cost, for some actions there’s a clear economic rationale too. For example, reducing energy consumption, reducing packaging, or re-imagining supply chains and processes to take excess, waste and cost out of the system. Where are the opportunities in your organisation to implement Purpose-led initiatives that also deliver economic benefits too?
- Colleague motivation, engagement, retention and attraction of talent is at risk – more colleagues are looking for more meaning in their work and want to work for organisations with a higher Purpose. And are more productive when they do! Are you at risk of losing colleagues to other organisations and struggling to recruit? How does your productivity compare to others? How much are these factors costing your organisation? With millennials caring about this more than their older colleagues, this trend is only going to increase as they become an increasingly larger part of the workforce
- Decision-making is faster and teams are clear, unified and aligned behind common goals – with a clear and embedded Purpose framework, everyone is clear on and working to the same agenda, reducing excess effort and resources on things that are not aligned. Decisions within a clear Purpose framework can be made more rapidly and/or delegated more easily, and decisions that are made are understood more clearly by teams – again reducing effort and resources to make, communicate and implement decisions. And clear teams are more engaged too, feeding into number 2 above!
‘The most successful company is not the one with the most brains, but the most brains acting in concert.’ Peter Drucker
- Innovation inspired by Purpose brings new opportunities – new and alternative ways to serve customers and/or run operations, for example new accessible services for underserved populations, growth in second hand/re-used offers. Some of these are expansions of existing markets, some bring the opportunity to create a new space. How can Purpose help drive a different way of thinking about challenges and opportunities in your organisation
- Purpose is increasingly important in retaining and growing customer engagement (and investors!) – customer expectations of organisations are higher than they have been on issues they care about. And customer interest also translates to investor interest. What expectations are becoming the norm in your market – what are things that you’re immediately disadvantaged if you don’t do them? Especially if your competitors are doing them? What is it that your customers truly care about? Where are the opportunities for you to stand out?
There is clearly a watch out in the customer space, however, which is particularly relevant at times such as these. There’s varying data on the scale of consumers who will pay a premium for sustainability, so with potentially less disposable income than previously, price points need to be carefully considered and managed.
However, with millennials becoming a more significant part of purchasing power – either as consumer or decision-makers in organisations – ensuring Purpose is clear in what you do and how you communicate as an organisation will continue to grow in importance.
In addition to the 5 areas above, an important step is also to consider everything you are doing already that could be called Purpose-related. Test that they do align with your overall Purpose activity, resonate with customers and colleagues, and that your resources are focused in the right places for your organisation.
- What actions are you taking today?
- Are you clear why you’re doing them? How do they support your Purpose and the impact your organisation makes with stakeholders?
- What actions should you stop? freeing up resources and funds to direct behind other activities
Reflect, review, reset and prioritise
As with everything, the key in looking across all the areas above is to prioritise and be clear on what is right for your organisation. The benefits of being Purpose-led can clearly outweigh the cost of individual actions and make you more resilient in downturns and tough trading conditions. What’s important is to be clear on what actions you are taking and why.
History and research have shown us that in times of crisis it’s the organisations with a strong Purpose that continue to outperform the competition. The current operating landscape provides an opportunity for organisations to reflect, review and reset on Purpose and now is the perfect time for leaders to seize the opportunity and unite their workforce through a clear Purpose aligned with short and long-term goals.
Check out our e-book https://bit.ly/3rRIEIV
Trello Board Purpose template https://bit.ly/3TAiZkb
Listen to the Purpose episode of our Podcast: https://bit.ly/3WNOPwa
Watch the Purpose episode of our Podcast: https://bit.ly/3DRhs2M